In a historic move, tens of thousands of dockworkers across the United States have gone on strike, shutting down 14 major ports along the east and gulf coasts. The indefinite strike, led by the International Longshoremen's Association (ILA), threatens to disrupt trade, impacting the economy ahead of both the holiday shopping season and the upcoming presidential election. This marks the first port shutdown in the US in almost 50 years.

Reasons Behind the Strike

The strike follows months of stalled negotiations between the ILA and the US Maritime Alliance (USMX), which represents shipping firms, port associations, and marine terminal operators. The two sides have been unable to reach an agreement over a six-year master contract covering approximately 25,000 port workers.

On Monday, the current contract expired, prompting the walkout on Tuesday. USMX claims it offered a substantial deal, including a nearly 50% wage increase, enhanced pension contributions, and improved healthcare options. However, ILA President Harold Daggett is pushing for higher pay increases, expressing concerns over automation’s potential threat to jobs.

Union workers believe they are owed compensation for the shipping industry's booming profits during the COVID-19 pandemic, as well as for inflation's effect on salaries. The ILA represents over 85,000 people, with 47,000 active members, and has hinted that a wider strike involving other union workers may be on the horizon.

Economic Consequences

The strike could have significant economic impacts, especially as it affects more than a third of US exports and imports. Sectors like food, clothing, footwear, and the auto industry are among the first to feel the impact, particularly for items like bananas, chocolate, tin, tobacco, and European cars.

Grace Zemmer, a US economist at Oxford Economics, estimates that the strike could cost the US economy at least $4.5 billion per week. The disruption may also lead to temporary job losses for over 100,000 people. With businesses dependent on “just-in-time” supply chains, consumers could face shortages and price hikes if the strike continues.

Political Implications

As the strike coincides with the lead-up to the US presidential election, it places President Joe Biden in a difficult position. While the President has the authority to suspend the strike for 80 days to allow further negotiations, the White House has stated that no intervention is currently planned. President Biden and Vice President Kamala Harris are closely monitoring the situation, urging both sides to negotiate in good faith.

A prolonged strike could have far-reaching consequences for the Biden administration, especially as the economy slows down and unemployment rises. Although dockworkers’ concerns about automation and cost-of-living resonate with many Americans, public opinion may shift if the strike drags on, causing further economic instability.

The strike also has historical significance, as it is the first time the ILA has gone on strike since 1977. While labor groups like the US Chamber of Commerce are urging President Biden to intervene, labor experts suggest the pressure of the strike might eventually force employers to return to the bargaining table with more substantial offers.

This article is based on the original report by Natalie Sherman, Business Reporter at BBC News. You can read the full report here.